Abstract
Fleming, the dominant personality in asset management in the last 25 years of the nineteenth century, built firm foundations for asset management in Scotland at the end of the nineteenth century. In Dundee and Edinburgh, Fleming and others (William Menzies, William Mackenzie) ensured that the investment management profession developed in a beneficial direction based on research, analysis, stewardship, team-based investment decision-making, low fees and an optimistic view of the fledgling economy of the USA after the American Civil War. The cable telegraph allowed global investment to become possible so technological innovation was critical. The modern form of the quoted company, after the Guinness flotation in 1886, with limited liability in the form of ordinary shares, paved the way for new investment possibilities.
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Notes
- 1.
Dundee’s Jute Mills (www.educationscotland.gov.uk, website accessed 29 May 2016).
- 2.
Norman Watson, Dundee: A Short History (Black & White 2006) 117.
- 3.
David Kynaston, The City of London Vol 1, A World of Its Own 1815–1890 (Pimlico 1995) 303. Kynaston was quoting Sir George Williams in 1906.
- 4.
Speech by Robert Fleming on being made a Freeman of Dundee, 2 May 1929 (Dundee City Archive).
- 5.
JC Gilbert, A History of Investment Trusts in Dundee (PS King & Son 1939) 13.
- 6.
Lance Davis & Robert Cull, International Capital markets, Domestic Capital Markets and American Economic Growth 1820–1914, in Cambridge Economic History of the US Vol 2 ed. Engermann & Gallman (Cambridge University Press 2000) 767.
- 7.
Albert Fishlow, Internal Transportation in the Nineteenth and Early Twentieth Centuries, in Cambridge Economic History of the US Vol 2 ed. Engermann & Gallman (Cambridge University Press 2000) 543.
- 8.
John Newlands, Put Not Your Trust in Money (Association of Investment Trust Companies 1997) 59.
- 9.
Scottish American Investment Trust Prospectus, 1 February 1873 (Dundee City Archive).
- 10.
According to the New York Times of 28 October 1865, 60% of ․100 Erie common shares were held in foreign, mainly British, ownership.
- 11.
Christopher Hoag, The Atlantic Telegraph Cable and Capital Market Information Flows (The Journal of Economic History 66/2, 2006).
- 12.
Ranald Michie, The London & New York Stock Exchanges 1850–1914 (Allen & Unwin 1987) 42. In real terms, £20 would be worth almost £1,700 today.
- 13.
Christopher Hoag, The Atlantic Telegraph Cable and Capital Market Information Flows (The Journal of Economic History 66/2, 2006).
- 14.
Christopher Hoag, The Atlantic Telegraph Cable and Capital Market Information Flows (The Journal of Economic History 66/2, 2006).
- 15.
Kenneth Garbade & William Silber, Technology, Communication and the Performance of Financial Markets: 1840–1975 (The Journal of Finance 33/3, 1978).
- 16.
University of Groningen, Madison Project (www.ggdc.net/maddison/maddison-project, website accessed 15 June 2016).
- 17.
University of Groningen, Madison Project (www.ggdc.net/maddison/maddison-project, website accessed 15 June 2016).
- 18.
University of Groningen, Madison Project (www.ggdc.net/maddison/maddison-project, website accessed 15 June 2016).
- 19.
Refrigeration was a very important new technology which enabled the transportation of food and hence the westward expansion of the US.
- 20.
Paul Romer, Why, Indeed in America? (NBER January 1996).
- 21.
John Newlands, Put Not Your Trust in Money (Association of Investment Trust Companies 1997) 65. Hawaii became a US territory only in 1900 following many decades of prevarication by US authorities.
- 22.
John Newlands, Put Not Your Trust in Money (Association of Investment Trust Companies 1997) 66.
- 23.
Janette Rutterford, Learning from one another’s mistakes: investment trusts in the UK and US, 1868–1940 (Financial History Review 16/2, 2009).
- 24.
K. Theodore Hoppen, The Mid-Victorian Generation, 1846–1886 (Clarendon Press 2000) 524.
- 25.
Ronald Weir, A History of the Scottish American Investment Company Limited, 1873–1973 (Scottish American Investment Company 1973) 11.
- 26.
Ronald Weir, A History of the Scottish American Investment Company Limited, 1873–1973 (Scottish American Investment Company 1973) 11.
- 27.
Ronald Weir, A History of the Scottish American Investment Company Limited, 1873–1973 (Scottish American Investment Company 1973) 11.
- 28.
The Share Investment Trust in England was also a very early investor into ordinary shares according to Janette Rutterford in Learning from one’s mistakes. I have used the words ‘ordinary shares’ as much as possible to distinguish between pure equity investments and ‘preference shares’. Preference shares were probably considered equity-type investments over the period of this book but today they would be more normally regarded as debt instruments.
- 29.
John Newlands, Put Not Your Trust in Money (Association of Investment Trust Companies 1997) 87.
- 30.
David Luck, Scotland’s 100 Oldest Companies, The Edinburgh Investment Trust (Business Archives Council of Scotland, May 2011).
- 31.
David Luck, Scotland’s 100 Oldest Companies, The Edinburgh Investment Trust (Business Archives Council of Scotland, May 2011).
- 32.
Francois Crouzet, The Victorian Economy (Routledge 2005) 329.
- 33.
Graeme G. Acheson et al, Happy Hour Followed by Hangover: Financing the UK Brewery Industry, 1880–1913 (Business History 58/5, 2016).
- 34.
James B. Jefferys, Business Organisation in Great Britain 1856–1914 (PhD University of London, 1938; Arno 1977).
- 35.
Graeme G. Acheson et al, Happy Hour Followed by Hangover: Financing the UK Brewery Industry, 1880–1913 (Business History, 58/5, 2016).
- 36.
Ranald Michie, The London Stock Exchange, A History (Oxford University Press 1999) 94.
- 37.
The Economist, 23 October 1886.
- 38.
SR Dennison & Oliver McDonagh, Guinness 1886–1939 (Cork University Press 2000) 22.
- 39.
SR Dennison & Oliver McDonagh, Guinness 1886–1939 (Cork University Press 2000) 23.
- 40.
Dividend information taken from Guinness Annual Report dated 10 August 1888; share price taken from The Times for 29 September 1888.
- 41.
SR Dennison & Oliver McDonagh, Guinness 1886–1939 (Cork University Press 2000) 23.
- 42.
SR Dennison & Oliver McDonagh, Guinness 1886–1939 (Cork University Press 2000) 23.
- 43.
John Newlands, The Edinburgh Investment Trust Celebrating 125 Years, 1889–2014 (pdf available on the Invescoperpetual website).
- 44.
John Newlands, The Edinburgh Investment Trust Celebrating 125 Years, 1889–2014 (pdf available on the Invescoperpetual website).
- 45.
John Newlands, The Edinburgh Investment Trust Celebrating 125 Years, 1889–2014 (pdf available on the Invescoperpetual website).
- 46.
Ranald Michie, The Global Securities Market, A History (Oxford University Press 2006) 106.
- 47.
Scottish American Investment Trust Prospectus 1 February 1873 (Dundee City Archive).
- 48.
Scottish American Investment Trust Minute Book, 16 March 1873 (Dundee City Archive).
- 49.
Lisa Giffen, How Scots Financed the Modern World (Luath 2009) 46.
- 50.
Jubilee speech by Robert Fleming to the 1923 (Dundee City Archive GB252/GD/EFM). He referred to crossing the Atlantic 128 times, which could be interpreted literally, but it is likely that this was 64 visits and 128 crossings.
- 51.
Hofstra University, New York, Liner Transatlantic Crossing Times, 1833–1952 (www.people.hofstra.edu/geotrans/linertransatlantic, website accessed 15 June 2016).
- 52.
Travelling internationally had its risks in the nineteenth century. The ship Atlantic sailed from Liverpool on 13 March 1873 but sank off Nova Scotia with the loss of 600 lives. According to his Jubilee speech in 1923, Fleming had nearly booked passage on the Atlantic but changed plans at the last minute and decided to travel to London instead.
- 53.
Scottish American Investment Trust Minute Book, first issue, 22 April 1873 (Dundee City Archive).
- 54.
Scottish American Investment Trust Minute Book, first issue, 22 April 1873 (Dundee City Archive).
- 55.
Dundee Yearbook 1892, Obituary Notices, John Guild.
- 56.
Charles P. Kindleberger, Manias, Panics and Crashes (Macmillan 1978) 121.
- 57.
The Panic of 1873 (www.pbs.org/wgbh/americanexperience, website accessed 29 May 2016).
- 58.
Edward Chancellor, Devil Take the Hindmost (Pan 1999) 185.
- 59.
New York Times, 14 October 2008, New York and the Panic of 1873.
- 60.
New York Times, 20 September 1873.
- 61.
National Bureau of Economic Research, Chapter 13. This bond yield of 6.5% looks to be somewhat low given the scope and impact of the financial panic.
- 62.
Lisa Giffen, How Scots Financed the Modern World (Luath 2009) 47.
- 63.
Jubilee speech by Robert Fleming to the 1923 AGM (Dundee City Archive GB252/GD/EFM). The cost of £1 per word in 1874 equates to about £75 in 2016 money, so it was still expensive to use the telegraph even though this cost had reduced rapidly since 1866.
- 64.
Scottish American Investment Trust Minute Book, First Issue 10 December 1873 (Dundee City Archive).
- 65.
Scottish American Investment Trust Minute Book, First Issue 26 January 1874 (Dundee City Archive).
- 66.
In practice the report by Poor of January 1874 was somewhat optimistic. By the middle of 1875 three railroads had defaulted on the payment of interest on bonds held by the First Issue. The defaulters were St Louis and Iron Mountain, the Erie Railway and the Houston and Great Northern Railroad.
- 67.
Alexander Nairn, Engines That Move Markets (Wiley 2002) 63.
- 68.
David Kynaston, The City of London Vol 1, A World of Its Own 1815–1890 (Pimlico 1994) 270.
- 69.
David Kynaston, The City of London Vol 1, A World of Its Own 1815–1890 (Pimlico 1994) 275. In this passage, Kynaston is referring to Charles Branch, a partner in a stockbroking firm writing in Fraser’s Magazine, 1876, A Defence of the Stock Exchange.
- 70.
The First Scottish sold its holdings in Erie at End-March 1875 because Fleming was concerned about possible default, which subsequently occurred. See Bill Smith, Robert Fleming 1845–1933 (Whittingehame House 2000) page 53.
- 71.
Bill Smith, Robert Fleming 1845–1933 (Whittingehame House 2000) 53.
- 72.
Edward Chancellor, Devil Take the Hindmost (Pan 1999) 171 – a comprehensive description is provided of these dubious dealing practises.
- 73.
Edward Chancellor, Devil Take the Hindmost (Pan 1999) 173.
- 74.
Edward Chancellor, Devil Take the Hindmost (Pan 1999) 167.
- 75.
Alexander Nairn, Engines that Move Markets (Wiley 2002) 47.
- 76.
Bill Smith, Robert Fleming 1845–1933 (Whittingehame House 2000) 56.
- 77.
Alexander Nairn, Engines That Move Markets (Wiley 2002) 49.
- 78.
Scottish American Investment Trust, Minute Book 5, March 1890 (Dundee City Archive).
- 79.
Bill Smith, Robert Fleming 1845–1933 (Whittingehame House 2000) 100.
- 80.
National Bureau of Economic Research, Chapter 13, Interest Rates.
- 81.
Specie Payments, Suspension and Resumption of (www.encyclopedia.com, website accessed 26 October 2016).
- 82.
Mira Wilkins, The History of Foreign Investment in the United States to 1914 (Harvard University Press 1989) 495.
- 83.
Ashraf Mahate, Contagion Effects of Three Late Nineteenth Century British Banking Failures (Business and Economic History 1994).
- 84.
John Turner, Banking in Crisis (Cambridge University Press 2014) 155.
- 85.
Prospectus of the Scottish American Investment Trust, 10 February 1873 (Dundee City Archive).
- 86.
The University of St Andrews included University College, Dundee under its auspices until 1967, at which point the University of Dundee was established as a separate entity. University College, Dundee was created in 1881 owing to the generosity of the Baxter family, principally Mary Ann Baxter, sister to Edward Baxter. (www.wikivisually.com/wiki/Mary_Ann_Baxter; website accessed 15 October 2016).
Bibliography
Primary Sources
The Dundee City Council Archives and Record Centre holds information about Robert Fleming and the minute books of the Scottish American Investment Trust. These minute books are legible, comprehensive and in very good condition.
Books
Edward Chancellor, Devil Take the Hindmost (Pan 1999)
Francois Crouzet, The Victorian Economy (Routledge 2005)
Lance Davis and Robert Cull, International Capital Markets, Domestic Capital Markets and American Economic Growth 1820–1914, in Cambridge Economic History of the US Vol 2 ed. Engermann and Gallman (Cambridge University Press 2000)
SR Dennison and Oliver McDonagh, Guinness 1886–1939 (Cork University Press 2000)
Albert Fishlow, Internal Transportation in the Nineteenth and Early Twentieth Centuries, in Cambridge Economic History of the US Vol 2 ed. Engermann and Gallman (Cambridge University Press 2000)
Lisa Giffen, How Scots Financed the Modern World (Luath 2009)
JC Gilbert, A History of Investment Trusts in Dundee (PS King & Son 1939)
K. Theodore Hoppen, The Mid-Victorian Generation, 1846–1886 (Clarendon Press 2000)
Charles Kindleberger, Manias, Panics and Crashes (Macmillan 1978)
David Kynaston, The City of London Volume 4: A World of Its Own, 1815 to 1890 (Pimlico 2002)
Ranald Michie, The London and New York Stock Exchanges 1850–1914 (Allen & Unwin 1987)
Ranald Michie, The London Stock Exchange, A History (Oxford University Press 1999)
Ranald Michie, The Global Securities Market, A History (Oxford University Press 2006)
Charles W. Munn, Investing for Generations, A History of Alliance Trust (Dundee University Press 2012)
Alexander Nairn, Engines that Move Markets (Wiley 2002)
John Newlands, Put Not Your Trust in Money (Association of Investment Trust Companies 1997)
Bill Smith, Robert Fleming 1845–1933 (Whittingehame House 2000)
John Turner, Banking in Crisis (Cambridge University Press 2014)
Mira Wilkins, The History of Foreign Investment in the United States to 1914 (Harvard University Press 1989)
Norman Watson, Dundee: A Short History (Black & White 2006)
Articles, Journals, Pamphlets, Websites, etc.
Graeme G. Acheson, Christopher Coyle, and John Turner, Happy Hour Followed by Hangover: Financing the UK Brewery Industry, 1880–1913 (Business History 58/5, 2016)
The Panic of 1873 (www.pbs.org)
Dundee Yearbook 1892, Obituary Notices, John Guild
The Economist
Education Scotland, Dundee’s Jute Mills (www.educationscotland.gov.uk)
Encycopedia.com, Specie payments, suspension and resumption of (www.encyclopedia.com)
Kenneth Garbade and William Silber, Technology, Communication and the Performance of Financial Markets: 1840–1975 (The Journal of Finance 33/3, 1978)
Christopher Hoag, The Atlantic Telegraph Cable and Capital Market Information Flows (The Journal of Economic History 66/2, 2006)
New York, Liner Transatlantic Crossing Times, 1833–1952 (www.people.hofstra.edu/geotrans/linertransatlantic)
James B. Jefferys, Business Organisation in Great Britain 1856–1914 (Arno 1977) PhD University of London, 1938
David Luck, Scotland’s 100 Oldest Companies, The Edinburgh Investment Trust (Business Archives Council of Scotland, May 2011)
Ashraf Mahate, Contagion Effects of Three Late Nineteenth Century British Banking Failures (Business and Economic History 23/1, 1994)
National Bureau for Economic Research, Chapter 13, Interest Rates (www.nber.org/databases/macrohistory/contents/chapter13)
New York Times
John Newlands, The Edinburgh Investment Trust Celebrating 125 Years, 1889–2014 (pdf available on the Invescoperpetual website)
Paul Romer, Why, Indeed in America? (NBER January 1996)
Janette Rutterford, Learning from One Another’s Mistakes: Investment Trusts in the UK and US, 1868–1940 (Financial History Review16/2, 2009)
Claire Swan, Dundee as a Centre of Financial Management (PhD, University of Dundee, 2009)
University of Groningen, Madison Project (www.ggdc.net/maddison/maddison-project)
Marc Weidenmier, Money and Finance in the Confederate States of America (www.eh.net)
Ronald Weir, A History of the Scottish American Investment Company, 1873–1973 (The Scottish American Investment Company 1973)
Mary Ann Baxter (www.wikivisually.com/wiki/Mary_Ann_Baxter)
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Morecroft, N.E. (2017). Robert Fleming and Scottish Asset Management, 1873–1890. In: The Origins of Asset Management from 1700 to 1960. Palgrave Studies in the History of Finance. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-51850-3_4
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